Written by Sumit Roy  |

February 21, 2012

Market Wrap: WTI & Brent Spike To 9-Month Highs As Iran Halts Exports; Gold ($1756), Silver, Platinum Surge

Details

Most commodities follow oil higher

A spike in oil prices supported most of the commodities complex today, but grains and natural gas lagged.

• Precious metals surged, led by platinum and palladium. The two industrial metals benefitted from an improving global economic outlook. Gold and silver also rose; the duo garnered support from inflation concerns amid rising oil prices.
  
  Gold was last trading higher by $21.07, or 1.21 percent, to $1756.02/oz, while silver added $0.76, or 2.25 percent, to $34.34. Platinum gained $41.75, or 2.53 percent, to $1688.75 and palladium rose by $15.47, or 2.22 percent, to $710.75.
  
  
• Geopolitical tensions spurred strength in crude oil prices again today as Iran pre-emptively halted oil exports to U.K. and France. The move is not seen as very significant, as the two countries only receive 1 percent and 4 percent, respectively, of their oil imports from Iran.
  
  Nevertheless, the move is reminder that the entire European Union will cease trading oil with Iran within months, putting the burden on Iran to find new buyers for its crude, while EU members must secure alternative supplies.
  
  WTI was last trading up by $2.54, or 2.46 percent, to $105.80/bbl after breaching $106 earlier — its highest level in nine months. Brent rallied by $1.42, or 1.18 percent, to $121.47, also the highest level in nine months.
  
  
• Natural gas gave back a portion of last week's rally today as the fuel fell by $0.07, or 2.5 percent, to $2.62/mmbtu. Though prices are oversold and technical conditions are ripe for a continued bounce, bearish fundamentals are keeping a lid on prices. Weather forecasts are still bearish, with warmer-than-normal temperatures forecast for the major consumption regions of the United States for the next two-week period.
  
  Still, prices may gradually move higher as some traders buy on hopes that the bottom may already be in.
  
  
• Grains were mixed today ahead of the USDA's crop forecast later this week. "The market is relatively quiet after a long weekend and keenly waiting for the USDA outlook figure. At the moment, we are seeing strong export demand for U.S. wheat and lower supplies from Russia and Ukraine," said Lynette Tan, an analyst with Phillip Futures.
  
  Corn was last trading lower by $0.12, or 1.79 percent, to $6.30/bushel, while soybeans added $0.06, or 0.49 percent, to $12.74, and wheat fell by $0.13, or 1.98 percent, to $6.31.
  
  
• Copper recovered all of Friday's losses and then some on bargain buying. The industrial metal was last trading higher by $0.12, or 3.43 percent, to $3.84/lb.
  
  "We've been maintaining a bullish view in the medium term, funds are still very interested in copper...We still see the medium-term outlook to the upside," said Dan Smith, head of metals research at Standard Chartered.